“I have objected to the manner in which a number of business decisions have been presented to the Board of Directors by management, without sufficient time for the Board to examine complex documents, to review significant transactions, or to discuss how the proposed actions fit into the Company’s strategic plan,” Schramm said in a letter, according to USA Today.
One recent decision was limiting subscribers to three movies per month for $9.95, while giving them the option to purchase additional tickets though the MoviePass app for a $2 – $5 discount. The newest version of the plan will also end “peak pricing,” where desirable showtimes cost a few bucks more.
That followed a multiple-hour outage in July that was originally blamed on a technical glitch — when, more accurately, it had simply run out of funds and needed to take a $5 million emergency loan at a high interest rate to pay back key partners and get back up and running.
“We believe this is an important step that will facilitate our access to capital over the next several years and enable us to implement our growth plans for MoviePass, MoviePass Films and MoviePass Ventures, and will enable us to pursue potential acquisitions to grow our business,” said Ted Farnsworth, chief executive officer and chairman of Helios and Matheson, in a press release. “With greater access to capital, we expect to solidify our position as the number one movie theater subscription service in the U.S. and continue to revolutionize the movie industry.”
But Schramm noted that his concerns have grown over the last two months, adding that “as management apparently has made a number of important corporate decisions and executed significant transactions either without Board knowledge or approval, or in Board meetings initiated with only a few hours of advance notice by email.”
He even noted that at least one meeting ended before he knew it had been called.
Meanwhile, Helios and Matheson shares have fallen from a share price of more than $2 in January to two cents on Thursday. In June, NASDAQ informed the company that its shares could be delisted from the exchange if it does not go back up to $1 per share or more by Dec. 18.